UNITED REPUBLIC OF TANZANIA
Ministry of Energy and Minerals
RURAL ENERGY AGENCY (REA)
INTRODUCTION
• The Rural Energy Agency (REA) was established
by the Act of Parliament in 2005 as an
autonomous institutions to promote and
facilitate access to modern energy services in
rural areas.
• The main functions of REA is to promote
development of rural energy projects by
providing grants and subsidies as well as working
with private sector, NGOs, CBO, Development
Partners and Government institutions .
ENERGY SITUATION IN TANZANIA
• The majority of rural Tanzanians have no
access to modern energy services including
electricity supplies
• About 12 percent of households in Tanzania
are connected to the electricity grid, with rural
coverage of only 2.5 percent in 2007
RURAL ENERGY FUND (REF)
• The Rural Energy Fund (REF) was established
by The Rural Energy Act, 2005 for the purpose
of providing grants to qualified project
developers;
• The REF provides capital subsidies to rural
energy projects through a trust agent;
• The REF provides training, capacity building
and technical assistance to project developers.
SOURCES OF FUNDS
• Government annual budgetary allocation;
• Contribution from international financial
organization, multilateral and bilateral
agencies and other Development Partners;
• Levy of up to five percent on the commercial
generation of electricity;
• Interest or return on investment;
CHALLENGES
• Inadequate funds. For instance electricity
projects which have been identified are
estimated to cost about Tsh. 1.2 trillion (US$
1bn);
• Private sector in Tanzania has a very limited
capability to invest in rural energy project
which requires substantial capital investment;
• Low purchasing power of rural communities.